Evaluating Blockchain Companies
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- Mike Slinn is an expert in evaluating blockchain and technology companies through technical due diligence to assess risks and opportunities for investors and startups. - He has extensive experience advising companies on technology strategy, product development, and organizational structure to prepare them for investment or acquisition. - His evaluations are tailored to each company and situation, and can range from quick assessments to multi-week engagements involving on-site reviews and written reports with recommendations.
Evaluating Blockchain Companies
- 1. Evaluating Blockchain Companies Mike Slinn August 29, 2018 Global Big Data Conference Santa Clara, CA
- 3. Companies and Products “Is This Real?”
- 4. See Me in Our Booth • I will be in the Micronautics Research booth • Most of today • Please talk to me there!
- 5. About Mike Slinn • Distinguished engineer • Electrical Engineering degree • Author of go-ethereum walkthrough • Contributor to Ethereum Java and Scala libraries • Operates ScalaCourses.com • Author of EmpathyWorks (artificial personality) • Expert witness • Twitter: mslinn
- 6. Key Facts about Mike Slinn • Focuses on generating business value by applying people, process and technology • Wrote 3 books on distributed computing • Created hundreds of online lectures on advanced computing concepts • Uses many computer languages (“polyglot”)
- 7. Prior Assessment Work • I have been performing technical due diligence for investors since 1985. • I have helped prepare companies for acquisition and investment since the early 90s; resulting in sales to IBM, Microsoft, NBC Interactive and AltaVista (later purchased by Yahoo!).
- 8. Risk, commissions, uniqueness, scales About This Presentation
- 9. Who Commissions Evaluations? • Investors - Interested in a new technology or a startup’s implementation/approach. • CEO – Vulnerability assessments and action plan. • Startups - Grooming themselves for investment or acquisition. • Competitors – Probing for weaknesses or potential acquisition.
- 10. Risk • I investigate and report on risk when performing technical due diligence. • Identify the factors in play, and those that are lacking, for the present state of the company being assessed.
- 11. Each Company Is Unique • I do not use a one-size-fits-all approach for evaluations. • Investors can ask me to address specific concerns that they may have. • I focus on technology product companies; I do not assess service firms, for example, or consulting firms.
- 12. Each Evaluation Is Unique • Some are for self-assessment • Some are done with the knowledge and cooperation of the company being evaluated • Some are done in secret, without cooperation • Some are done undercover (with senior management approval) • Ethics are important in this work!
- 13. I Do Not Do • Security audits • Valuations (where dollar values are assigned) - but I work with accountants who do • Endorsements
- 15. Quick Sanity Check • "Is this project real?“ • Proceed one day at a time • Daily reports • Appropriate for $25,000+ investments
- 16. Key Person Vulnerability Mitigation • Assess impact of loss of key technical person • Recommend a mitigation plan • Execute or oversee plan
- 17. Scala Effectiveness Assessment • 5 days • Is Scala being used effectively? • Standards and best practices • Unrecognized or underestimated problems • Suggestions for your technical strategy for the F/OSS world that Scala comes from. • “You Moved Us Forward 8 Months!”
- 19. General Outline of Activities • Funded initial assessment • Present written report • Discusses his findings and optional next steps • I can act as an advisor, interim CTO, or interim VP Engineering
- 20. Preparing for Investment or Sale • Help building a winning technical team • Establishing just the right amount of process • Streamlining the technical architecture • Help define product roadmap
- 21. Typical Deliverables (Report) • Are the people, processes and technology appropriate for the development stage of the technology company? • Can the engineering team consistently deliver quality results on time and on budget? • Is the management team effective?
- 22. Subject Stages • Idea only • Technical standard • Fundamental research done • Initial implementation • First rewrite / first pivot • Scaling • Integration • Professional Services
- 23. Idea only • White paper but no implementation or prototype. • Too early for a technical evaluation.
- 24. Technical standard • Produced by a standards body. • Implementation is important
- 25. Fundamental research done • This is the earliest stage for a detailed evaluation of a product company or technical standard. • Process normally does not exist yet • The team consists of only a few key people at this stage. • Customer engagement is very important, but is often completely lacking.
- 26. Initial implementation • A VC’s dream: first mover advantage. • Usually the company can describe what they are building, but the reasoning behind why a customer might want it is weak. • I care about the communication between product management, such as it might manifest, and engineering.
- 27. First rewrite / first pivot • Attrition of key people is a commonly experienced risk for startups at this stage. • This might be a good thing, or not. • Sometimes investors or the board of directors will engage me to assess and strategize potential attrition.
- 28. Scaling • Addressing this problem requires data and a focus on operations. • This is the time to add instrumentation and to analyze the resulting data so operations can be optimized. • A dedicated operations team is often set up when scaling becomes an issue.
- 29. Integration • Another desirable problem to have, if customers and business partners clamor for integration with a startup’s products.
- 30. Professional Services • In the early days of a startup, engineering might perform custom work for the initial customers. • This is in general not desirable, and professional services should be carved out from engineering early on.
- 32. Excessive Management • The kiss of death: many impressive- sounding titles for prestigious managers, but few or no direct reports who have authority to do things. • However, when it is time to introduce middle managers, it should be done properly.
- 33. Yet Another X • Problems and opportunities should be well- known when creating a product that competes with incumbents. • Central question is often “can the product be significantly better for a specific application?” • These assessments generally cost less, because they can be quite focused.
- 34. Security Cannot Be Retrofitted • Secure systems can only be designed that way from the start o Trying to secure an existing platform can only give marginal improvements • Need orders of magnitude of improvements to smart contract security o Not possible without a fresh start
- 35. Sample Special Assignment • The investors brought me in. • The board, investors, CEO, and CFO knew of my assignment, but VP level and below did not • initialAssessmentNeutered.docx • observationsNeutered.docx